How to defeat the US$5 billion A2P messaging fraud

23 February, 2015 at 6:53 PM

Posted by: admingirl

More than 600 mobile network operators (MNOs) have yet to address the crippling loss of revenue arising from the presence of ‘grey’ route messaging in the global application-to-person (A2P) SMS marketplace.

According to CEO, Perry Offer, Dialogue Group estimates that as much as 70% of global A2P traffic is not being monetised by operators because of these grey routes, and ending such leakage is a revenue creation opportunity for MNOs of at least US$5 billion a year.

An A2P message delivered via a grey route connection originates from a source outside the operator’s own network, typically using a channel ordinarily reserved for carrying person-to-person (P2P) communications. A grey route A2P message can be sent when access to P2P channels is open for third parties to deliver A2P messaging; often without the recipient network even realising this is the case.

As the P2P connections can carry no fee, they are extremely profitable for the sending third party when used to deliver A2P. Why? Because they charge a transaction fee for each message they deliver to their customers, which is much lower than the recipient operator’s own “on-net” A2P message termination rate.

The grey route market not only destroys the significant revenues that should rightfully flow to the mobile operators, but it also impacts A2P SMS market prices. With rock bottom pricing and non-legitimate routes, this leads to disorderly markets, damaging levels of spam and potential security threats – all of which result in poor customer experience and increased subscriber churn rates.

Lack of understanding

However, the majority of MNOs still do not realise the extent to which grey route messaging passes through their network and the loss of income and damage to customer satisfaction that it is causing.

This problem has existed for years, yet it’s only now that MNOs are searching for new and sustainable revenues that the time for them to solve this problem has arrived. In order to eradicate the significant loss of revenue they are suffering, MNOs must move away from encouraging SIM farms and creating disorderly markets by tackling fraudulent A2P activity head on – and they need to do it now.

Every month that goes by is a missed opportunity for MNOs. If they fail to take action, they will leave the door open for their competitors to benefit from significant levels of new A2P revenues and move ahead in the marketplace in a way that they cannot.

Needless race to the bottom

For those MNOs who do not address the challenges in the market, not only will they lose out on collecting any A2P messaging revenues, but they will never realise the full value that the A2P SMS channel can bring them and the market will continue its completely unnecessary race to the bottom to the detriment of all.

It is within the power of the entire A2P messaging value chain to work together to eliminate A2P fraud and generate far greater revenues than ever before for all players. 2015 can be the year for this!

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